Gillespie v. National Farmers Union Property & Casualty Co. – Legal Entitlement to UIM Coverage

Underinsured motorist coverage in North Carolina offers relief for car accident victims when the person at fault for the crash didn’t have enough insurance to cover all the damage. at the wheel

Although most auto insurance companies in the Carolinas offer UIM coverage as part of their standard policy, questions regarding who can collect on these benefits arise often in court. In fact, UIM cases continue to set precedent. New case law is constantly emerging that outlines the boundaries of when collection is allowed, and how much.

The recent case of Gillespie v. National Farmers Union Property & Casualty Co. was weighed by the North Dakota Supreme Court and involved the question of whether a teenaged girl was entitled to underinsured motorist coverage under her mother’s policy. The girl, who was seriously injured in a crash, had been the one driving. She was operating a car that was owned by her aunt, who was killed in the crash. The aunt’s auto insurance policy (GEICO) paid the girl $25,000 in no-fault benefits. However, it rejected her request for bodily injury liability damages, even though the girl asserted her aunt was liable for negligent entrustment of the vehicle. The girl had only earned her learner’s permit two days prior to the crash.

According to court records, the mother’s UIM insurer would not pay UIM benefits because, it argued, the mother had not proven her daughter was entitled to the underlying bodily injury damages in the first place.

The teen girl was driving her aunt’s vehicle with her aunt and another passenger inside when she lost control of the car, causing it to overturn. The aunt died, and the teen girl and the other passenger suffered grave injuries.

The mother’s UIM policy provided for up to $100,000 in benefits per person or $300,000 per accident. The mother and daughter (plaintiffs) asserted that the daughter had unpaid medical bills from the crash and that her injuries and medical expenses far exceeded the $25,000 paid by GEICO under its no-fault coverage. The plaintiffs asserted the aunt’s vehicle lacked sufficient insurance to provide liability coverage for all of those injured in the auto accident. When the mother’s auto insurance company refused to pay the difference, the plaintiffs sued.

The district court granted summary judgment to the defendants, dismissing the action for UIM coverage and ruling the limits of all applicable bodily injury liability policies hadn’t yet been exhausted. Although conceding that the word “exhausted” was ambiguous, it strictly interpreted the word to mean the payment of all liability benefits under available policy limits before UIM claims can be made.

The plaintiffs appealed. They argued the aunt’s vehicle met the definition of an underinsured motor vehicle, and the number of injured parties and the severity of their injuries exhausted the liability coverage and triggered the UIM benefits. As proof, the plaintiffs presented GEICO’s unequivocal claim that it would make no further payments to the girl. With no more recovery from GEICO and no other insurance options, the plaintiffs argued no other options existed.

The North Dakota Supreme Court noted both parties agreed that the GEICO liability limit is $25,000 per person and that the aunt’s car was an underinsured motor vehicle. The question was whether the plaintiff was legally entitled to collect UIM benefits. The state high court ruled that she was not. A person’s right to recover UIM benefits is conditional on the insured’s proving he or she is legally entitled to recover from the tortious (wrongful) conduct of the owner or operator of an underinsured vehicle. In this case, while negligent entrustment may be a cause of action upon which to assert such a claim, GEICO’s denial of coverage did not resolve the question of whether the aunt was legally liable for the plaintiff’s injuries. For this reason, the plaintiff failed to establish an entitlement to UIM benefits under her mother’s policy.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

Gillespie v. National Farmers Union Property & Casualty Co., Oct. 5, 2016, North Dakota Supreme Court

More Blog Entries:

N.C. Supreme Court: DOT Still Liable for Triple Fatal Car Accident, Sept. 30, 2016, Asheville Car Accident Attorney Blog

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